When we think about the future of social media, it's natural to think about future generations as well. Research firm Ampere Analysis found that people aged 18-24 had significantly changed their attitudes in the last two years#. Generation Z are considering quitting social media, that was also the result of half the people U.S. marketing firm Hill Holliday surveyed.

Surveys respondents say they'd like to give a more realistic representation of who they are. Social networks are a showcase of lives that don't exist. To gain likes and followers people need to position, trick, and lie. Migrating from Facebook# to Instagram# provides little relief#, in social media, it's easy to be singled out.

A new Pew Research Center survey of U.S. adults finds that a majority of Americans across a wide range of demographic groups use Facebook# (except 65 and older). The findings however highlight conflicting attitudes toward social media — harder to give up, say some; not hard to give up, say many others.

Beyond analytical evidence, each of us is somewhere on the scale — weighing the value we receive and give on one side, and the influence we exert and (maybe) how we're influenced by others on the other.

The attention problem

While social media has enabled anyone to reach anyone else on the planet, the truth is that we tend to pay attention more readily to people who think and act like us. Nature has given us a compelling reason to do that — nobody survives alone. Humans band together, it's our instinct.

But it's also a necessity. The complexity of modern life requires collaboration for success. Research has demonstrated that diversity enhances our ability to explore new ideas#, allowing us to see a problem from different points of view. More variety in how people think about an issue is a strength.

However, a meta-analysis of 108 studies and more than 10,000 teams# found that diversity hinders consensus. When we're trying to get things done, we want to put away our differences, and work together. Convergence is more useful to the final output. The answer might be to have moderate diversity#.

Moderation is compelling to businesses. Amazon's principle number 8#, “Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.” But what about the public at large? It might depend on their bias for action.

Quick reactions to what looks and sounds different, not in a funny way, happen when a bias for action is compounded by our natural tendencies to pay more attention to people like us. Why go with like, we shy away from different.

But impulse is only half the story. Social networks algorithms exacerbate the problem. They serve up what we're supposed to pay attention to, and send us down rabbit holes before we have time to reflect. it all happens seamlessly.

Social networks' dilemma

Social media has made it easier to find people to friend and follow; it's made it harder to identify people who deviate from what we already like and favor. Within the inevitable echo-chamber, it takes extra effort to include new perspectives in our reading and learning. Not impossible, it just requires more work.

The New York Times published a less than flattering profile# of Facebook's role in exacerbating the problem. The story, one of many in the last couple of years, seems to have hit a nerve. That's because it records a pattern of behavior at best described as shocking.

According to people present, Facebook COO Sheryl Sandberg yelled, “You threw us under the bus!” at Alex Stamos, security chief for sharing information about the social network's failure to contain Russia-linked activity on its site.

No leader would relish being called out for delaying, denying, and deflecting in a crisis. The NYT calls attention to a consistent pattern of allowing the use of its algorithms to target ads. It's a pattern that started raising questions 10 years earlier.

Our dilemma is do we use social media or not? Do we throw away the potential benefits of getting the word out on our work and business, meeting new people, discovering resources, with the bad aftertaste of privacy concerns, tribal behavior, and time wasters?

The impact of social media's business model

Humans pay attention to patterns, and awareness of the drawbacks of social networks is reaching a high point. Social networks are starting to pay attention — loss of users means potential loss of revenue. But loss of reputation can have larger implications.

Nice words are a weak substitute to action. Apple CEO Tim Cook says, “We’re not going to traffic in your personal life. Privacy to us is a human right. It’s a civil liberty.” Apple's product has always been a closed system. The company's privacy statement says:

We’re committed to keeping your personal information safe. That’s why we innovate ways to safeguard your privacy on your device, why we’re up front about how we personalize your experience, and why we equip developers with the best tools to protect your data.

In 2011, security researchers found that the iPhone kept records of everywhere you go#. They even set up an open-source application to let users check what location data is shared#. But as Cook said in Brussels earlier in the year#, Apple's business model doesn't depend on selling customer data.

Zuckerberg says, “We Get It,” in an internal memo, but acting on it may be more challenging for the company. Facebook's brand is about “Making the world more open and connected”. The majority of Facebook revenues are generated through advertising, monetizing attention is the product.

Facebook leverages Aggregation Theory#, a concept by analyst Ben Thompson. As Thompson says, “Aggregation Theory is a completely new way to understand business in the Internet age.” The Internet enables zero distribution costs, zero marginal costs, and zero transactions costs.

Which means that “the most important factor determining success is the user experience”. Social networks operate algorithms that make it easy to share, taking away friction and taking advantage of the reward mechanism of human psychology. Their business model, where the suppliers are also users, demands increased levels of engagement.

The attempted conservation of attractive profits bleeds into the rest of the web through programmatic advertising. The habits of language, speed, and volume of one-dimensional avatar interactions bleed into real life.

Social media impacts not just our online experience anymore, it impacts our experience of the world. So much so that we've come to expect quick results and scale, without a thought as to the network effects that need to be in place for it to work that way.

Why social media is not going away any time soon

Facebook is still well-established in the habits of many, including businesses large and small. The recent revelations about the social network are a tipping point for more individuals and some businesses that were on the fence. They raise questions about the frequency and intensity of social network use.

Taking a break from social media because it's distracting has also become a common explanation. 44 percent of the young people Hill Holliday surveyed quit or considered quitting social media to “use time in more valuable ways”#. Some say social media causes anxiety, but they also fear missing out on their friends.

The answer may be using a combination of messaging platforms, niche social networks and subscription sites and email updates. People want to connect with like-minds on topics they're passionate about. Topical sites like NextDoor and Houzz, for example. Highly-curated information is viewed as valuable.

On Facebook, while the Pages reach continues to go down, Groups are thriving. They numbered 620 million in 2010#. It makes sense, with a focus on community they invite more frequent interaction and discussions. New moderation tools support the work of community managers/group administrators and help keep the interaction civil.

Social media has brought about many changes. What doesn't change is our gregarious nature, which compels us to want to be part of what is happening. Twitter's evolving tagline# is an interesting window into the phenomenon. “What are you doing?” became “Find out what’s happening, right now, with the people and organizations you care about.”

We want to know what's going on, and add our 0.2 cents. Why secrets, gossip, and rumors are still going strong. Everyone predicted that the rise of social networks would decrease the number of events and attendance would thin out. But the opposite has been true. We have even more events on more topics now.

People want to meet in person. There's no substitute for being physically in the same room. The value of rubbing shoulders with each other, learning through experience are as old as humankind. Hard to compete with the energy levels and value of good events and the influence of membership communities.

... but demand is changing

Increasingly, those communities are built on the Web (and not on Facebook). Social media is not going away any time soon. But demand is changing. The Washington Post reports that Facebook lost 4 million users in Europe in the last six months and growth has plateaued in the United States#.

We are changing how we view the relationship between value and influence. When what we value is based on our values, behavior changes. When enough people make the change, they form a new community, find a new hangout.

In a community, you're a person again, not an avatar. User sentiment, not regulatory action, is a more effective instigator or change, says Thomson#. “Never underestimate the power of a small group of people to change the world. In fact, it is the only way it ever has,” says Margaret Mead.

A few million users might be a drop in the bucket for Facebook, but just enough for making a change. If we want a better future, we'll need to create it. We do it by solving human problems. Community is a good environment for collaboration.

There's a reason why you've been on hold with customer service for an hour says the Wall Street Journal, that company may have decided you're not profitable. It's one of the stories I shared in the most recent Learning Habit issue.

Algorithms determine Customer Lifetime Value (CLV) by keeping a tally of how much money a customer spends. It's important to remember that CLV is about profit and not just revenue. Companies determine the CLV of a person as a score. The score may include geography — the zip code of where we live — and the number of returns we make.

What else could be part of the score? Some algorithms may include website and customer service interactions, social media activity, marital status — many of the things marketers asked for years in warranty cards and contests, for example — in addition to transaction records.

In theory, CLV is a prediction of the net profit attributed to the entire future relationship with a customer. But is it not missing something?

Crippling flaw in CLV

Innovation must be seen as an investment in the human capital and capabilities of customers.

[...] serious customer lifetime value metrics should measure how effectively innovation investment increases customer health and wealth. Successful innovations make customers more valuable. That’s as true for Amazon, Alibaba, and Apple as for Facebook, Google, and Netflix. No one would dare argue that these innovators don’t understand, appreciate, or practice a CLV sensibility.

In other words, what has the company done lately to keep customers coming back for more? This is the value of a brand to a person or fan. When done well, companies can partner with customers in creating value. Cost reduction, advocacy, product ideas, feedback and data sharing are just some of the upsides.

Part of the brand reinvention of a business where we grew revenues to position it for an acquisition included partnering with the ultimate users of our products to gain insights on the state of the market. That qualitative information helped us shape our forecasts and quantitative tracking.

This kind of valuable personal involvement tends to get lost in all the talk about engagement in social. An overlooked yet effective marketing tactic continues to be making the customer better. In fact, investing in customers increases their value to the business.

Other dangers of CLV

What happens inside the organization should not be discounted from CLV. It's not a number plucked from thin air, it's the result of a calculation we make based on the business we run.

Bill Gurley addresses other dangers of overly focusing on customer lifetime value for Internet businesses. My observation is that once we find a formula, we typically become enamored with the formula and forget where it came from and that the point is not the formula but the behavior we're trying to predict.

Data looks back, we're terrible at making predictions, especially when emotion is involved. Gurley# has “reasons to avoid worshiping at the LTV altar.” Some of his points are useful to seeing a broader definition of customer lifetime value:

It's a tool, not a strategy — confusion of output and inputs. Things like average revenue per user (ARPU) and customer acquisition costs (CAC) are outside our control.

The model to calculate CAC is confused and misused — for example, customers who seek out a business on their own or as referred by others should not be calculated as a cost. Many discount “revenues” rather than marginal cash contribution. All future variable costs of supporting the customer should be part of the equation to estimate future contribution.

Business is not physics, the formula is not absolute — complex adaptive systems cannot be modeled with certainty.

CLV variable tug at one another — imagine a balloon. When you squeeze in one area, the air moves to another. Raise prices and you increase churn, increase customer service support and cost goes up. The problem keeps moving because it's very challenging to have cheaper, faster, and better all at once.

Purchased customers underperform organic customers — this is almost on every metric. Once businesses are done pampering the top customers according to their definition, they'll likely need to buy more customers to replace those that have walked away because they were treated poorly (as in not deemed valuable enough).

Marketing dollars could go to the customer — in servicing the customer, giving the customer a better reason to buy more. This is value left on the table when a business follows the premise that CLV is entirely the responsibility of customers. Jeff Bezos says, “More and more money will go into making a great customer experience, and less will go into shouting about the service. Word of mouth is becoming more powerful. If you offer a great service, people find out.”

An obsession on formulas is blinding — effective public relations, social media, and word of mouth require more creativity and an open mind. They reward businesses with some of the best reach money can't buy, the spontaneous testimonial and recommendation of customers.

Tomorrow never arrives — focusing overly on the past, as in data about purchases, and the future, as in lifetime value, discounts the potential value of a simple single action and decision today.

The problem includes timing. Which is as much art as science. Few things in life are certain. While CLV can be useful. What's the lifetime cost of getting value wrong?

Any change at the top of an organization impacts the group and the company as a whole. The trend on rapid change has affected the marketing group faster than other groups. Spencer Stuart has done some research# about higher CMO turnover in 2018.

A few of the key takeaways resonate with conversations I've had with peers:

Poor alignment between the CEO and CMO on the mission (and the timeline) of the marketing organization’s output.

Too little time spent defining clear priorities for the CMO, which can lead to flawed or incomplete assessment criteria, as CMOs’ roles vary depending on the industry.

Mismatch between the talent and the needed skills around the corner. The opportunities and challenges CMOs have historically been dealing with are not necessarily the same ones they will face in the future.

These seem to apply across industries as well.

As all senior leaders, marketers have two imperatives — develop value and communicate value. This means focusing on internal as much as external audiences and outcomes, connecting marketing to the business strategy, and building credibility with consistent results.

In addition to domain competence, all professional knowledge workers should constantly evolve a set of skills that include:

communication — the ability to craft a compelling narrative

continuous learning — a commitment to updating domain skills, but also to understand the nature of change and technology and its impact on human behavior

leadership — it's a tired term, but the idea of inspiring and building a team of continuous learners is still useful

As I look at the chart above, I cannot help but think that there might be a changing of the guard as well. Curious as to your reactions.